The Organisation for Economic Co-operation and Development’s (OECD’s) composite leading indicators (CLIs), designed to anticipate turning points in economic activity relative to trend, point to easing growth momentum in India (see chart). The data for February 2017 shows that among major economies, only India shows easing growth momentum. CLIs show growth momentum picking up in China, Russia, Brazil, the US, Canada, Germany and the UK, and stable growth momentum in France, Italy and Japan.
CLIs for February for India show year-on-year change of -1.16%, in contrast to China’s 1%, Russia’s 3.52%, Brazil’s 4.49% and the US’s 0.75%.
OECD prognosis flies in the face of most analysts’ anticipation of a pickup in the Indian economy, as it recovers from the trauma of demonetisation. It is probable that the indicators OECD uses to track the economy may have been thrown out of whack by the demonetization episode and this has skewed the prognosis. Nevertheless, the chart also shows that CLI declined month-on-month last October—before demonetization